ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 27.03.2026
CESTAT Chennai Ruled on Validity of Load Port Chartered Engineer Certificates in Second-Hand Machinery Valuation Dispute
This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com or on his Mobile +91-9999005379.Β Β ββ β βββ β
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case of M/s. β Abirami Weaving Mills vs. β The Commissioner of Customs (Customs Appeal No. β 40225 of 2017). β This case revolved around the valuation of imported second-hand machinery and the rejection of the declared value based on a Chartered Engineerβs certificate. β The Tribunalβs decision has set a precedent for similar cases, emphasizing the importance of adhering to established guidelines and the validity of Load Port Chartered Engineer certificates. β
Background of the Case
M/s. Abirami Weaving Mills imported 20 units of βUsed Picanol GTM AS Rapier Looms with CAM Motion Type: GTM-2N190 with Standard Accessoriesβ from M/s. β PT Bandung Sakura Textile Mills, Indonesia. β The machinery, manufactured in Belgium in 1993, was imported in used condition. β The importer declared the unit price as USD 4,000 (CIF) and the total invoice value as USD 80,000 (CIF). However, the importer failed to produce a certificate from an independent Chartered Engineer or equivalent authority in the country of supply, which would provide details such as the price of new machinery, its current condition, reconditioning or repair costs, dismantling costs, and expected lifespan. β
The customs authorities rejected the declared value of USD 4,000 per unit and re-determined the value at USD 7,500 per unit based on a local Chartered Engineerβs certificate. β The importer paid the enhanced duty without protest but later challenged the valuation in an appeal before the Commissioner (Appeals). β The Commissioner upheld the original order, leading the importer to file a second appeal before the CESTAT.
Key Arguments Presented
Appellantβs Arguments
- Validity of Load Port Chartered Engineerβs Certificate: The appellant argued that the valuation of second-hand machinery should be based on the Load Port Chartered Engineerβs certificate, as per para-8 of the Board Circular No. β 4/2008-Cus dated 12.02.2008. The Load Port certificate was obtained on 28.09.2015, prior to the issuance of Board Circular No. β 25/2015 dated 15.10.2015, which introduced additional requirements for such certificates. Therefore, the rejection of the Load Port certificate was unjustified. β
- Transaction Value: Referring to Section 14 of the Customs Act, 1962, the appellant contended that the transaction value of imported goods should be the price actually paid or payable for the goods when sold for export to India. β The appellant emphasized that there was no evidence to suggest that the declared value was incorrect or that the importer and supplier were related parties. β
- Inconsistencies in Local Chartered Engineerβs Certificate: The appellant highlighted that the local Chartered Engineerβs certificate did not provide details about the operational condition of the machinery, which was crucial for valuation. β This raised questions about the reliability of the reassessed value. β
- Precedents: The appellant cited previous judgments, including Barani Industries vs. Commissioner of Customs [2025 (10) TMI 829 CESTAT Chennai] and Motor Industries Co. Ltd. vs. CC [2009 (244) ELT 4 (SC)], to support their case. β
Respondentβs Arguments
The Departmental Representative supported the findings of the lower authorities, arguing that the rejection of the declared value was justified due to the absence of certain details in the Load Port Chartered Engineerβs certificate.
Tribunalβs Observations and Decision
After hearing both parties and reviewing the documents, the Tribunal focused on the key issue: whether the declared value of the imported second-hand machinery was rightly enhanced based solely on the local Chartered Engineerβs certificate. β
- Validity of Load Port Certificate: The Tribunal noted that the Load Port Chartered Engineerβs certificate contained all material particulars of the imported machinery, including its original value and confirmation that the goods were used and not reconditioned. β The only missing detail was the year of manufacture, which the Tribunal deemed non-critical for determining the nature and value of the goods. β
- Rejection of Declared Value: The Tribunal found that the rejection of the declared value was unjustified, as the Load Port certificate was improperly dismissed. β The Boardβs Circular No. β 4/2008-Cus clearly states that a local Chartered Engineerβs certificate should only be accepted in the absence of a proper Load Port certificate. β In this case, the Load Port certificate was available and contained sufficient information to establish the nature and value of the goods. β
- Precedents and Guidelines: The Tribunal referred to previous judgments, including Barani Industries vs. Commissioner of Customs, which supported the appellantβs contention that the rejection of the declared value based solely on the local Chartered Engineerβs certificate was untenable. β
- Need for Re-evaluation of Guidelines: The Tribunal observed that the Boardβs circular issued in 2008 might require a re-evaluation in light of advancements in technology and the current practices in international trade. β
Final Order
The Tribunal concluded that the redetermination of the declared value based solely on the local Chartered Engineerβs certificate was not in order. β It set aside the impugned order and allowed the appeal, thereby upholding the declared value of the imported second-hand machinery.
Implications of the Judgment
This landmark decision has significant implications for importers and customs authorities:
- Reaffirmation of Transaction Value: The judgment reinforces the principle that the transaction value of imported goods should be the primary basis for valuation, provided there is no evidence of misrepresentation or related-party transactions. β
- Importance of Load Port Certificates: The Tribunal emphasized the validity of Load Port Chartered Engineer certificates, provided they contain sufficient information to establish the nature and value of the goods. β
- Need for Updated Guidelines: The Tribunalβs observation about the need to revisit the 2008 Board Circular highlights the importance of aligning regulatory guidelines with current technological advancements and trade practices. β
Conclusion
The CESTAT Chennaiβs decision in the case of M/s. β Abirami Weaving Mills vs. β The Commissioner of Customs serves as a crucial reminder of the importance of adhering to established guidelines and respecting the validity of Load Port Chartered Engineer certificates. β It also underscores the need for customs authorities to provide clear and justifiable reasons when rejecting declared values. β This judgment is expected to provide clarity and guidance for future cases involving the valuation of imported second-hand machinery.
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Source: CESTAT Chennai
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